REDCASTLE RESOURCES LIMITED — Annual Report 2004

Aug 30, 2004

Appendix 4E

PRELIMINARY FINAL REPORT GIVEN TO THE ASX UNDER LISTING RULE 4.3A

Name of entity

Great Pacific Capital Limited
ABN or equivalent reference $#$
	57 096 781 716
Previous corresponding period Reporting period
Financial year ended 30 June 2004	Financial year ended 30 June 2003

Contents	Page No.
Results for announcement to the market	1.
Commentary on results	1.
Net tangible assets per ordinary share	2.
Other information regarding this Appendix 4E	2.
Segment report	$\mathbf{2}$
Subsidiaries acquired and disposed during the year	$\overline{2}$
Statement of Financial Performance	3.
Statement of Financial Position	4.
Statement of Cash Flows	5.
Significant accounting policies and notes to the financial statements	6.

RESULTS FOR ANNOUNCEMENT TO THE MARKET

Revenue from ordinary activities	ud	25.59%	to	\$15,983,463
Profit from ordinary activities after income tax attributable to members	un	45.55%	to	\$5,115,468
Net profit for the year attributable to members	up	45.55%	to	\$5,115,468

Dividends per share	Amount per share	Franked amount per share at $30\%$ tax
Final	cents €	cents 0
Interim	cents	cents 0

No dividend was declared in respect of the year ended 30 June 2004.

Commentary on results

During the year, the consolidated entity consisting of Great Pacific Capital Limited and its controlled entities continued to be involved in the provision of debt facilities in funding residential property development projects and property related transactions.

The increase in revenue and profit during the year as compared to previous year reflects the continuous growth of the consolidated entity.

The compounding effect of interest revenue capitalized on loan facilities provided over a longer term will also provide greater growth rate in revenue towards the later part of the facilities. This pattern of revenue stream is reflected in the current year as most of the facilities provided entered into the second or third years.

	Current Year	Previous corresponding vear
Net tangible assets per ordinary share (NTA backing in cents per shares)	144	84

Other information

The information contained in this preliminary final report is based on the attached financial statements and relevant notes for the year ended 30 June 2004 which are in the process of being audited.

Segment information

The consolidated entity operates in one geographical segment, being Australia and in one business segment, being the provision of subordinated debt facilities in funding residential and commercial property development.

Subsidiaries acquired and disposed during the year

The following subsidiaries were acquired during the year:

GPC Finance Pty Ltd which was incorporated in NSW on 13 August 2003 with 100 % ordinary shares acquired by Great Pacific Capital Limited on date of incorporation.

Great Pacific Hotel Investment Pty Ltd which was incorporated in NSW on 1 March 2004 with 100% ordinary shares acquired by Great Pacific Capital Limited on date of incorporation.

No subsidiary was disposed during the year.

STATEMENT OF FINANCIAL PERFORMANCE FOR THE YEAR ENDED 30 JUNE 2004

		Consolidated 2004	Consolidated 2003
	Notes	\$	S
Interest income	2	12,649,099	11,518,112
Interest expense	$\overline{2}$	(5, 442, 584)	(5, 224, 174)
Net interest income		7,206,515	6,293,938
Fee and commission income	3	3,016,599	1,207,090
Fee and commission expense	3	(302, 357)	(19,681)
Net fee and commission income		2,714,242	1,187,409
Other income		317,765	1,575
Deferred expense written off		(75,000)	(75,000)
Depreciation and amortisation expense	4	(382, 895)	(420, 678)
Employee expense		(490, 110)	(433, 489)
Lease and rental expense		(315, 229)	(126, 026)
Legal and professional fees		(912, 098)	(975, 920)
Fixed assets written off		(99, 291)
Other expenses from ordinary activities		(461, 479)	(208,701)
Profit from ordinary activities before
income tax		7,502,420	5,243,108
Income tax expense relating to ordinary activíties		(2,386,952)	(1,728,487)
Net profit attributable to members of the parent entity		5,115,468	3,514,621
Increase in asset revaluation reserve		2,240,527	657,981
Total changes in equity other than those resulting from transactions with owners
as owners		7,355,995	4,172,602
			Cents per share
Basic earnings per share Diluted earnings per share	5 5	43.04 43.04	33.39 18.70

STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2004

		Consolidated	Consolidated
		2004	2003
Assets	Notes	\$	S
Cash and liquid assets		1,248,758	5,253,682
Receivables		19,862,642	19,255,928
Loans		18,226,959	21,466,446
Deferred tax assets		1,162,587	1,684,766
Other assets		19,109	90,707
Property, plant and equipment	6	5,814,039	2,767,595
Intangible assets	7		366,666
Total assets		46,334,094	50,885,790
Liabilities
Payables		2,827,368	5,044,020
Current tax liabilities		2,861,917	873,412
Provision – annual leave		28,265	25,983
Borrowings	8	20,141,911	31,205,727
Deferred tax liabilities Other liabilities		3,232,077	3,355,810
		100,000
Total liabilities		29,191,538	40,504,952
Net assets		17,142,556	10,380,838
Equity
Share capital	9	4,735,500	4,735,500
Asset revaluation reserve		2,898,508	657,981
Retained profits	10	9,508,548	4,987,357
Total equity		17,142,556	10,380,838

STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 30 JUNE 2004

		Consolidated 2004	Consolidated 2003
	Notes	\$	S
Cash flows from operating activities
Interest received		12,878,273	750,610
Interest paid		(5,905,307)	(2,364,690)
Fee received		2,000,625	170,015
Fee paid		(272, 490)	(19,664)
Operating receipts		415,014	477,866
Operating payments		(2,672,455)	(1,988,450)
Net cash provided by $/$ (used in) operating
activities	11(a)	6,443,660	(2,974,313)
Cash flows from investing activities
Proceeds from sale of investment			112,500
Proceeds from repayment of loans		23,483,237	8,415,060
Loans to developers and borrowers		(20, 243, 750)	(14, 651, 251)
Payment for option fees to purchase
property			(169, 557)
Payments for property, plant and
equipment		(845,009)	(1,108,894)
Net cash provided by $/$ (used in) investing
activities		2,394,478	(7, 402, 142)
Cash flows from financing activities
Proceeds from issue of share capital			1,885,500
Payment of dividend		(574,082)
Proceeds from borrowings		7,969,864	871,888
Repayments of borrowings		(3,100,000)
Proceeds from issue of promissory
notes		5,860,000	13,970,000
Redemption of promissory notes		(22,998,844)	(6,350,000)
Net cash (used in) / provided by financing
activities		(12, 843, 062)	10,377,388
Net (decrease) / increase in cash held		(4,004,924)	933
Cash at the beginning of the financial year		5,253,682	5,252,749
Cash at the end of the financial year	11(b)	1,248,758	5,253,682

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2004

1. Summary of significant accounting policies

Basis of preparation of financial statements

The financial statements in this preliminary final report for the year ended 30 June 2004 has been prepared in accordance with Australian Accounting Standards, in particular AASB1032: Specific Disclosure by Financial Institutions, other authoritative pronouncements of the Australia Accounting Standard Board, Urgent Issues Group Consensus Views and the Corporations Act 2001.

These financial statements cover the economic entity of Great Pacific Capital Limited and controlled entities. Great Pacific Capital Limited is a listed public company, incorporated and domiciled in Australia.

These financial statements have been prepared on an accruals basis and are based on historical costs and do not take into account changing money values, or, except where stated, current valuations of non-current assets. Cost is based on the fair values of the consideration given in exchange for assets.

Accounting policies adopted has been consistently applied with those of previous year, unless otherwise specified.

The following is a summary of the significant accounting policies adopted by the consolidated entity in the preparation of these financial statements.

(a) Principles of consolidation

The consolidated financial statements incorporate the assets and liabilities of all entities controlled by Great Pacific Capital Limited ("the Company or Parent entity") as at 30 June 2004 and the results of all controlled entities for the financial year then ended.

Control exists where Great Pacific Capital Limited has the capacity to dominate the decision-making in relation to the financial and operating policies of another entity so that the other entity operates with Great Pacific Capital Limited to achieve the objectives of Great Pacific Capital Limited.

Great Pacific Capital Limited and its controlled entities together are referred to in these financial statements as the consolidated entity. The effects of all transactions between entities in the consolidated entity are eliminated in full.

(b) Revenue

Fees, commissions and interest income from the provision of financial services are recognised on an accrual basis.

(c) Taxation

$(i)$ Income tax

Tax effect accounting procedures are followed. Income tax expense is calculated on the operating profit adjusted for permanent differences between taxable and accounting income. Any future income tax benefit relating to tax losses is not carried forward as an asset unless the benefit can be regarded as being virtually certain of realisation. Income tax on net cumulative timing differences is set aside to the deferred income tax and future income tax benefit accounts at the tax rates which are expected to apply when those timing differences reverse.

(ii) Tax Consolidation regime

Great Pacific Capital Limited and its wholly-owned Australian subsidiaries will form an income tax consolidated group under the Tax Consolidation Regime. Great Pacific Capital Limited will recognise the current and deferred tax assets and liabilities for the tax consolidated group. The Group will notify the ATO when lodging the tax return for the year ended 30 June 2004. Each company in the Group will contribute to the income tax payable in proportion to their contribution to the net profit before tax of the tax consolidated group.

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2004

1. Summary of significant accounting policies (continued)

(iii) Goods and services tax

Revenues, expenses and assets are recognised net of the amount of goods and services tax (GST), except where the amount of GST incurred is not recoverable from the Australian Taxation Office (ATO). In these circumstances the GST is recognised as part of the cost of acquisition of the asset or as part of an item of expense. Receivables and payables are stated inclusive of GST. The net amount of GST recoverable from, or payable to, the ATO is included as part of current receivables and payables in the statement of financial position.

(d) Investments

Interests in unlisted securities in the consolidated financial statements, are brought to account at cost.

Controlled entities are brought to account at cost in the consolidated financial statements.

(e) Land and Buildings

Land and buildings are measured on the fair value basis, being the amount for which an asset could be exchanged between knowledgeable willing parties in an arm's length transaction. They will be revalued by an independent third party registered property valuer on a as required basis but at least once every three years.

(f) Depreciation

Depreciation on property, plant and equipment is calculated on a straight line basis. The depreciation rate used is based on the expected useful life of the assets. The expected useful lives are as follows:

Office fittings	13 years
Computer equipment	4 years
Communication equipment	7 years
Furniture and fixtures	13 years

(g) Recoverable amount of non-current assets

Non-current assets are recorded at cost. The carrying amounts of all non-current assets are reviewed to ensure they are not in excess of their recoverable amounts. If the carrying amount of a non-current asset exceeds the recoverable amount, the asset is written down to the lower value. The relevant cash flows have not been discounted to their present value in assessing their recoverable amount.

(h) Deferred expenses

The deemed value of shares issued to the Directors and the underwriter for the initial public offer are classified as deferred expenses and are written off over three years. Should the carrying value of the deferred expenses be assessed to be in excess of their recoverable amounts, the deferred expenses will be written down to the recoverable amount immediately.

(i) Goodwill

On acquisition of some, or all the equity of an entity in the case of an investment in a controlled entity, the identifiable net assets acquired are measured at fair value. The excess of the fair value of the cost of acquisition over the fair value of the identifiable net assets acquired, is brought to account as goodwill and amortised on a straight line basis over 30 months, being the period during which the benefits are expected to arise. As at 30 June 2004, all the goodwill were fully amortised.

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2004

1. Summary of significant accounting policies (continued)

(j) Employee benefits

(i) Wages and salaries and annual leave

Liabilities for wages and salaries and annual leave are recognised, and are measured as the amount unpaid at the reporting date at current pay rates in respect of employee's services up to that date.

(ii) Superannuation

The amount charged to the statement of financial performance in respect of superannuation represents the contributions made by the consolidated entity to various superannuation funds nominated by the employees.

(k) Borrowing costs

Borrowing costs are recognised as expenses in the period in which they are incurred, except where they are included as part of the costs of acquiring land and building for redevelopment. Borrowing costs carried forward are amortised over the life of the loan or 5 years, whichever is earlier.

(I) Comparatives

Where required by Accounting Standards comparative figures have been adjusted to conform with changes in presentation for the current year.

(m) Adoption of Australian Equivalents to International Financial Reporting Standards

The introduction of International Financial Reporting Standards (IFRS) effective for financial years commencing 1 January 2005, requires the production of accounting data for future comparative purposes at the beginning of the next financial year.

The economic entity's management are assessing the significance of these changes and preparing for their implementation.

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2004

1. Summary of significant accounting policies (continued)

(m) Adoption of Australian Equivalents to International Financial Reporting Standards (continued)

The directors are of the opinion that the key differences in the economic entity's accounting policies, which will arise from the adoption of IFRS are:

Goodwill on consolidation

Under the proposed changes to the IAS 22; Business Combinations, goodwill is to be capitalised to the statement of financial position and subjected to an annual impairment test. Amortisation of goodwill is to be prohibited. Current accounting policy of the entity is to amortise goodwill on a straight line basis over the lesser of the benefit period or 20 years. However, as at 30 June 2004 all goodwill carried forward have been fully amortised.

Income Tax

Currently, the economic entity adopts the liability method of tax-effect accounting whereby the income tax expense is based on the accounting profit adjusted for any permanent differences. Timing differences are currently brought to account as either a provision for deferred income tax or future income tax benefit. Under the Australian equivalent to IAS 12, the economic entity will be required to adopt a balance sheet approach under which temporary differences are identified for each asset and liability rather than the effects of the timing and permanent differences between taxable income and accounting profit.

Impairment of assets

The group currently assesses the carrying amount of non-current assets by determining the recoverable amount on the basis of undiscounted cash flows. Under Australian equivalents to IFRSs, the group will be required to determine the recoverable amount as the higher of fair value less costs to sell and value in use which is determined using discounted cash flows. It is likely that when discounting initially applied on transition at 1 July 2004, impairment losses may need to be recognised on some major assets

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2004

	Consolidated 2004	Consolidated 2003
2. Interest income and expense	S	\$
Interest income
Loans and advances Other	12,542,768 106,331	11,377,396 140,716
Total interest income	12,649,099	11,518,112
Interest expense
Borrowings Other	5,434,154 8,430	5,156,991 67,183
Total interest expense	5,442,584	5,224,174
3. Fee and commission income and expense
Fee and commission income
Arranger fee Establishment fee	151,125 350,000	68,175
Management fee	49,500	60,500
Success fee	525,000	900,000
Other	1,940,974	178,415
Total fee and commission income	3,016,599	1,207,090

Management fee charged by Great Pacific Capital Limited to its controlled entities represents the fee for managing the loan portfolio of the controlled entities and is based on a fixed rate of 12% on the value of the loan portfolio.

Fee and commission expense
Application fee	119,821
Arranger fee	10,000	1,805
Commission	122,490
Management fee	50,046	17,876
Total fee and commission expense	302,357	19,681
4. Depreciation and amortisation
Depreciation	10,924	17,097
Amortisation - borrowing costs	5,305	3,581
Amortisation - goodwill	366,666	400.000
	382.895	420.678

11

GREAT PACIFIC CAPITAL LIMITED AND CONTROLLED ENTITIES

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2004

	Consolidated 2004 Cents per share	Consolidated 2003
5. Earnings per share
Basic earnings per share	43.04	33.39
Diluted earnings per share	43.04	18.70
(a) Reconciliation of earnings to net profit
Net profit	5,115,468	3,514,621
Earnings used in the calculation of basic earnings per share	5,115,468	3,514,621
Notional earnings on options after tax based on 180 days bank bill rate		323,400
Earnings used in the calculation of diluted earnings per share	5,115,468	3,838,021
(b) Weighted average number of shares	Number of shares
Weighted average number of shares used in the calculations of basic earnings per share	11,885,500	10,526,907
Weighted average number of options outstanding		10,000,000
Weighted average number of shares used in the calculations of diluted earnings per share	11,885,500	20,526,907

(c) Classification of Securities

The options outstanding in 2003 have been classified as potential ordinary shares and are included in determination of diluted earnings per share. The options expired on 30 June 2004.

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2004

6. Property, plant and equipment Land and buildings At independent valuation 5,800,000 2,650,000 5,800,000 2,650,000 Furniture, fixtures and fittings 1,752 110,140 Accumulated depreciation (326) (13, 352) Written down value 96,788 1,426 Computer and other equipment 30,337 33,255 Accumulated depreciation (17, 724) (12, 448) Written down value 12,613 20,807 5,814,039 2,767,595 Reconciliations: (i) Land and buildings Balance at the beginning of the year 2,650,000 857,619 Additions 909,473 1,134,400 Revaluations during the year 2,240,527 657,981 Balance as at the end of the year 5,800,000 2,650,000 (ii) Furniture, fixtures and fittings Balance at the beginning of the year 96,788 103,525 Additions 1,600 2,034 Depreciation expense (8,771) (3,084) Write off (93, 878) 96,788 Balance as at the end of the year 1,426 (iii) Computer and other equipment Balance at the beginning of the year 26,674 20,807 Additions 2,459 5,060 Depreciation expense (8,326) (7, 840) Write off (5, 414) 12,613 20,807 Balance as at the end of the year	Consolidated 2004 \$	Consolidated 2003 \$

Valuations

The independent valuation on land and buildings owned by the consolidated entity were carried out between 15 July and 29 July 2004 by TC Wetherall (JP, API, RAPI, AIBS) of TCW Consulting Pty Ltd, Wollongong.

The valuation was performed on the basis of market value as at balance date.

The net increment arising from the valuations has been transferred to the asset revaluation reserve.

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2004

	Consolidated 2004 \$	Consolidated 2003 \$
7. Intangible assets
Goodwill at cost	999,999	999,999
Accumulated amortisation	(999, 999)	(633, 333)
		366,666
8. Borrowings
Bank loan – secured	2,401,747	1,531,883
Promissory and debenture notes	12,535,000	29,673,844
Other short term borrowing	5,205,164
	20,141,911	31,205,727
Maturity analysis:
Not longer than 3 months	5,205,164	850,000
Longer than 3 and not longer than 12 months	7,794,995	22,158,839
Longer than 1 and not longer than 5 years	7,141,752	8,196,888
	20,141,911	31,205,727

The bank loan is secured by first mortgage over the consolidated entity's land and buildings and fixed and floating charges over the assets of the controlled entities acquiring the land and buildings.

The promissory and debenture notes are repayable at various maturity dates and secured by floating charges over assets of the controlled entities issuing these notes. Interest is payable monthly in arrears with rates ranging from 5% per annum to 9% per annum.

Bonus payments with rates ranging from 8% to 15% are payable upon maturity of the promissory and debenture notes.

9. Share capital

11,885,500 ordinary shares
(2003:11,885,500)	4.735.500	4,735,500

Ordinary shares entitle the holder to participate in the dividends and the proceeds on winding up in proportion to the number of and amounts paid on the shares held.

At shareholders meetings each ordinary share is entitled to one vote when a poll is called, otherwise each shareholder has one vote on a show of hands.

10. Retained profits

Balance at the end of the year	9.508.548	4,987,357
Dividends provided for and paid	(594.276)
Great Pacific Capital Limited	5,115,468	3.514,621
Net profit attributable to the members of
Balance at the beginning of the year	4.987.357	1.472.736

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2004

	Consolidated 2004	Consolidated 2003
11. Notes to the statement of cash flows	\$	S
(a) Reconciliation of net cash provided by $/$ (used in) operating activities to profit from ordinary activities after income tax
Net cash used in operating activities	6,443,660	(2,974,313)
Depreciation	(10, 924)	(17,097)
Amortisation - borrowing cost	(5,305)	(3,581)
Amortisation - goodwill	(366, 666)	(400,000)
Write off of deferred expenses	(75,000)	(75,000)
Loan establishment fee capitalised	350,000
Fixed assets written off	(99, 281)
Other	8,698	7,524
Increase / (decrease) in operating assets
Interest receivable	1,803,751	10,766,318
Other receivables	(1, 197, 037)	1,129,570
Other	(522, 179)	959,069
(Increase) / decrease in operating liabilities
Interest payable	2,194,118	(2,757,859)
Payables	(1,541,313)	(419,061)
Provisions for tax	(1,988,505)	(2,700,949)
Provisions	121,451
Profit from ordinary activities after income tax	5,115,468	3,514,621
(b) Reconciliation of cash
For the purpose of the Statement of Cash Flows, cash at the end of the financial year is reconciled to the following items in the Statement of Financial Position:
Cash and cash at bank	1,148,758	5,228,682
Term deposits	100,000	25,000
	1,248,758	5,253,682